I own the rights on about 30 acres near Ft Morgan: Twshp 5N 60W 6th PM and have just received an offer from Primo Oil Corp to lease for 125/acre, 1/6 royalties, 5 years w/5 yr option. I’ve checked Colorado Oil and Gas and found activity in that area seems to be heating up in the past few months. It’s very near Weld County, which apparently is very hot. I’m considering asking 150/acre, 3/16 royalties and 3 year w/option. But I’ve been told there’s no point negotiating because my holding is too small and the company will just walk away. Any advice?
I think you got some bad advice! Personally, I’d say you’re probably cheating yourself out of a lot of money, offering it up for $150. I would presume you’ve looked at the Weld County posting closely? You should be able to get similar offers to me, and I’m in Arapahoe County. I think we’re up to an offer of $850/acre, 20% royalty, and a 3/3 term. All of my neighbors have the same offer, and we have 35 acre parcels–adding up to 640 acres. Do you know your neighbors? Are they all getting offers? You need to form one group, and negotiate together. FYI, are first offer was $300 per acre a few months ago. Nobody got too excited about it, and then other companies came in, and they keep competing against each other, and increasing the offer. If I were you, I’d sit back and do nothing for awhile. Primo is not likely to just go away because you don’t respond. And if they do, they’ll be replaced by a few more companies making offers.
Thanks, Lisa, for the info. Where are you in Arapahoe? Unfortunately, I don’t know any neighbors. I inherited the mineral rights as part of an old homestead in my mother’s family. I think it’s somewhere in the vicinity of Weldona.
We’re near Aurora. Not knowing your neighbors makes it tougher, but it doesn’t mean that you have to take any old offer. Have you looked to see who all have signed leases for your section, and surrounding sections in Morgan County? In Arapahoe, you can go online to the Clerk and Recorder’s office and see the signed leases filed for a particular section. They don’t tell you the amount of the bonus paid, but you’ll at least know the other terms, and who the lease is with. If you see a lot of other companies on the leases, then more than likely you’ll be getting other offers if you sit back and wait. If you get another offer, at least you can play them against each other.
penny rudolph said:
Thanks, Lisa, for the info. Where are you in Arapahoe? Unfortunately, I don’t know any neighbors. I inherited the mineral rights as part of an old homestead in my mother’s family. I think it’s somewhere in the vicinity of Weldona.
Hello. I think we are one of your neighbors. My father inherited the mineral rights to 61 net acres at Township 6 North, Range 60 West, 6th PM. He has received an offer for a one time payment of $125/acre for a 3 year lease with a 2 year option at $175/acre with 1/6 royalties on both the original lease & the option. The company offering is Baseline Minerals Inc out of Denver. I tried negotiatinge and they told me they would not up the offer but we have not signed yet. Any other neighbors out there with offers?
Penny:
Ted has given you some great advice. Another factor to consider is the track record of Primo Oil Corp. While I have not dealt with them, they appear to be in the business of marketing and trading energy resources and not in the business of drilling. To the extent that you are relying on the royalty payments to justify this lease you should look into the likelihood that drilling will actually occur. A reasonable bonus payment is important but to realize the true value of your minerals you want someone to drill and produce. Ask Primo to give you information on their plans for drilling or, if they are not in the drilling business, ask them whom they are procuring the leases for and determine that end producer’s plans for actually drilling on your property.
I also echo Ted’s comments about the relative value of mineral leases in your area. One property may be extremely valuable with a nearby parcel less valuable. I am currently working with a client who owns 2,000 acres near Ft. Lupton and they have been offered $25/acre, a 1/8 royalty and a 5/5 term. On its face the offer seems extremely low but we will be doing the kind of due diligence Ted suggests in order to determine the appropriate market price.
Check with your neighbors, check the County records and press Primo for more information. If you need assistance, take Ted up on his offer and give him a call. If I can be of assistance you may call my law office as well. 303-776-3100.
Michelle, For what it’s worth Baseline offered me same deal at $125/acre back in early October. When I said no, they upped it to $150/A (within an hour, after supposedly checking with the “office”), but I still said no primarily because My sister and I had a bad experience with someone working for Baseline a couple years ago and I simply don’t trust them. ~~Penny
Michelle said:
Hello. I think we are one of your neighbors. My father inherited the mineral rights to 61 net acres at Township 6 North, Range 60 West, 6th PM. He has received an offer for a one time payment of $125/acre for a 3 year lease with a 2 year option at $175/acre with 1/6 royalties on both the original lease & the option. The company offering is Baseline Minerals Inc out of Denver. I tried negotiatinge and they told me they would not up the offer but we have not signed yet. Any other neighbors out there with offers?
Penny, Thanks for the info. I may be confused but isn’t the offer that you listed from Primo Oil Corp to lease for 125/acre, 1/6 royalties, 5 years w/5 yr option actually a worse offer than the one Baseline gave you? Do you have that bad a taste in your mouth with Baseline?
penny rudolph said:
Michelle, For what it’s worth Baseline offered me same deal at $125/acre back in early October. When I said no, they upped it to $150/A (within an hour, after supposedly checking with the “office”), but I still said no primarily because My sister and I had a bad experience with someone working for Baseline a couple years ago and I simply don’t trust them. ~~Penny
Michelle said:Hello. I think we are one of your neighbors. My father inherited the mineral rights to 61 net acres at Township 6 North, Range 60 West, 6th PM. He has received an offer for a one time payment of $125/acre for a 3 year lease with a 2 year option at $175/acre with 1/6 royalties on both the original lease & the option. The company offering is Baseline Minerals Inc out of Denver. I tried negotiatinge and they told me they would not up the offer but we have not signed yet. Any other neighbors out there with offers?
Hi Michelle, yes, I have a bad opinion of Baseline. They tried what I regard as nasty, though probably not illegal tactics. They sent out leases for zero bonus, etc., along with a letter demanding signature and return in postage paid envelope. I could only think that some elderly people might have signed such a thing without really knowing what it was. The lease sent my syster showed the wrong land description and even the wrong county. And a later offer from Prima (I think I spelled it incorrectly as Primo before) was better on several fronts, especially the renewal option bonus. When I talked with Baseline this year of course they said well, it was just a rogue land man. Nonetheless, I just don’t trust them. But that’s me. The Baseline guy I talked with this year made it sound like Baseline wanted the lease to do seismic studies and I’m not sure that makes sense.
Thanks very much Cameron, I really appreciate the info. I do think I spelled the oil co name incorrectly as Primo. It’s Prima. And the landman told me they plan to do the drilling themselves. But of course, I assume that doesn’t commit them to actually doing it.
Cameron Grant said:
Penny:
Ted has given you some great advice. Another factor to consider is the track record of Primo Oil Corp. While I have not dealt with them, they appear to be in the business of marketing and trading energy resources and not in the business of drilling. To the extent that you are relying on the royalty payments to justify this lease you should look into the likelihood that drilling will actually occur. A reasonable bonus payment is important but to realize the true value of your minerals you want someone to drill and produce. Ask Primo to give you information on their plans for drilling or, if they are not in the drilling business, ask them whom they are procuring the leases for and determine that end producer's plans for actually drilling on your property.
I also echo Ted's comments about the relative value of mineral leases in your area. One property may be extremely valuable with a nearby parcel less valuable. I am currently working with a client who owns 2,000 acres near Ft. Lupton and they have been offered $25/acre, a 1/8 royalty and a 5/5 term. On its face the offer seems extremely low but we will be doing the kind of due diligence Ted suggests in order to determine the appropriate market price.
Check with your neighbors, check the County records and press Primo for more information. If you need assistance, take Ted up on his offer and give him a call. If I can be of assistance you may call my law office as well. 303-776-3100.
Thanks so much for the info, Ted. I have been checking the county records in my general area of Morgan, which is very handy.
Ted Preston said:
Penny,
It's difficult to determine the value of minerals under a particular parcel. Morgan County is a big place, and so is Weld County, and not every parcel in either county has equal potential to produce oil and gas. It is possible to gather information that will give you a better sense of the value, though.
The oil companies use seismic data to identify locations with high potential, and they are willing to pay more for leases in the hot spots. (areas that appear to be likely oil and gas "traps" under the surface.) A mile away, their seismic data may indicate the absence of a hot spot, and they will be willing to pay very little. Unfortunately, it's difficult to get the seismic data, so land and mineral owners are at an information disadvantage.
One thing you CAN do is search the Morgan County clerk's records, and find other oil leases in close proximity to yours. You can then call the other mineral owners and ask them how much they were paid, and you can also build a list of companies that are leasing in close proximity to your land. If there are more than one or two, you can send a letter to each of them and solicit offers for the lease of your minerals. Then they start bidding against each other, and you may get closer to the real value of the minerals under your parcel.
If you still want to talk to an attorney, as you mentioned in another thread, you can call me at (307) 742-7896. I'm licensed to practice in Colorado, and I'd be happy to talk with you.
Michelle said:
Penny, Thanks for the info. I may be confused but isn't the offer that you listed from Primo Oil Corp to lease for 125/acre, 1/6 royalties, 5 years w/5 yr option actually a worse offer than the one Baseline gave you? Do you have that bad a taste in your mouth with Baseline?
penny rudolph said:Michelle, For what it's worth Baseline offered me same deal at $125/acre back in early October. When I said no, they upped it to $150/A (within an hour, after supposedly checking with the "office"), but I still said no primarily because My sister and I had a bad experience with someone working for Baseline a couple years ago and I simply don't trust them. ~~Penny
Michelle said:Hello. I think we are one of your neighbors. My father inherited the mineral rights to 61 net acres at Township 6 North, Range 60 West, 6th PM. He has received an offer for a one time payment of $125/acre for a 3 year lease with a 2 year option at $175/acre with 1/6 royalties on both the original lease & the option. The company offering is Baseline Minerals Inc out of Denver. I tried negotiatinge and they told me they would not up the offer but we have not signed yet. Any other neighbors out there with offers?
we are neighbors and got a much lower offer...lets talk
roxy hanson wells said:
Michelle said:Penny, Thanks for the info. I may be confused but isn't the offer that you listed from Primo Oil Corp to lease for 125/acre, 1/6 royalties, 5 years w/5 yr option actually a worse offer than the one Baseline gave you? Do you have that bad a taste in your mouth with Baseline?
penny rudolph said:Michelle, For what it's worth Baseline offered me same deal at $125/acre back in early October. When I said no, they upped it to $150/A (within an hour, after supposedly checking with the "office"), but I still said no primarily because My sister and I had a bad experience with someone working for Baseline a couple years ago and I simply don't trust them. ~~Penny
Michelle said:Hello. I think we are one of your neighbors. My father inherited the mineral rights to 61 net acres at Township 6 North, Range 60 West, 6th PM. He has received an offer for a one time payment of $125/acre for a 3 year lease with a 2 year option at $175/acre with 1/6 royalties on both the original lease & the option. The company offering is Baseline Minerals Inc out of Denver. I tried negotiatinge and they told me they would not up the offer but we have not signed yet. Any other neighbors out there with offers?
Roxy, My personal email is mmmichelleb@yahoo.com. Send me your phone number. I have gotten better offers.
Penny, Send me your phone number too if you are interested.
Thanks, Michelle
roxy hanson wells said:
we are neighbors and got a much lower offer...lets talk
roxy hanson wells said:
Michelle said:Penny, Thanks for the info. I may be confused but isn't the offer that you listed from Primo Oil Corp to lease for 125/acre, 1/6 royalties, 5 years w/5 yr option actually a worse offer than the one Baseline gave you? Do you have that bad a taste in your mouth with Baseline?
penny rudolph said:Michelle, For what it's worth Baseline offered me same deal at $125/acre back in early October. When I said no, they upped it to $150/A (within an hour, after supposedly checking with the "office"), but I still said no primarily because My sister and I had a bad experience with someone working for Baseline a couple years ago and I simply don't trust them. ~~Penny
Michelle said:Hello. I think we are one of your neighbors. My father inherited the mineral rights to 61 net acres at Township 6 North, Range 60 West, 6th PM. He has received an offer for a one time payment of $125/acre for a 3 year lease with a 2 year option at $175/acre with 1/6 royalties on both the original lease & the option. The company offering is Baseline Minerals Inc out of Denver. I tried negotiatinge and they told me they would not up the offer but we have not signed yet. Any other neighbors out there with offers?
I just got an offer to buy my mineral rights outright. Anyone else get such an offer? Or have an opinion?
~~Penny Rudolph
Yes Penny - I received an unsolicited offer on Tuesday to purchase my mineral rights also in Twshp 5N Range 60W 6th PM from Apple Creek LLC. Has anyone ever heard of them? Jan
penny rudolph said:
I just got an offer to buy my mineral rights outright. Anyone else get such an offer? Or have an opinion?
~~Penny Rudolph
Jan, I did track down their address to an upscale residence (!) near the country club in Denver. There also was a brief mention of them in a Wyoming item from a few months ago. Otherwise, I drew a blank. Not sure what is going on, who they might be fronting, what they might know or be up to.
Jan and Penny,
What were they offering per acre?
I realize this forum is now a few months old but I felt inclined to respond because of Penny’s previous experience with Baseline. I have been working with Baseline for several years and am familiar with this area and almost all of the contractors that may have been working at one point or another. Baseline has been diligent with hundreds of the landowners in this area for over 3 years now and almost any other company in the area has been there less than a year and are trying to market or re-sell your lease with stories of empty promises. They are driving the prices up to point where many lands are being avoided and won’t be developed. Penny, if you are checking the records I believe you have found that Baseline has been very fair with offering like terms on ALL their leases where Prima’s leases have ranged widely in terms and in some cases may have taken advantage of a few landowners without the know how.
Please e-mail me at austinmitchellrose@gmail.com with any questions or in regards to any bad experience you may of had, I would love to discuss in detail and offer an apology. Penny, I believe what your sister may have received in 2008 was a Mineral Permit for seismic operations that were being conducted. The mineral permit would have only granted permission to have her lands evaluated, afterwhich, she would have the opportunity to lease with better terms depending on the results. Where were these other companies during the collapse of 2009 when Baseline continued to invest in the Morgan community while simultaneously drilled new wells in the area?
Lastly, Jan and Penny, it’s never a good idea to sell your minerals unless you absolutely need the money. And if you must, send the offer around to all the companies working in the area to get yourself a fair price.